Majority of students takes loan from numerous sources for supporting their studies. As loans are loans and that should have to be paid back at some point unlike the scholarships, financial aids or grants. A student who takes loan not only pays back the total amount but also it must be repaid with interest. Commonly college graduates pays back these loans in 10 years.
There is no doubt about that college is one of most expensive investments in your lifetime. As the National Postsecondary Student Aid Study (NPSAS) shows that 65% of four-year undergraduate students take out student loans to help paying for college.
Student loans are inclusive to undergrads but as matter of fact grad students needs more financial leverage than undergrad students.
Most Common Types of Student Loans
There are total six types of most common loans, which are taken by students mostly. These are:
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Federal Student Loans
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Private Students Loans
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Student Loans with bad of poor credit
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Student Consolidation Loans
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Alternative Loans
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Institutional Loans
Federal Student Loans
The Federal Family Education Loan Program’s (FFELP) main purpose is to provide additional financial aid to American college students and their families. Stafford Loans, Perkins Loans and Federal Consolidation Loans are included in Federal Student Loans.
When students file the annual FAFSA, they are then automatically considered for the Federal Student Loans.
The single most used student loan is Stafford Loan and it comes in two versions that’s subsidized and unsubsidized. Almost every student qualifies for some kind of financial aid through the Stafford Loan program.
Federal Student Loans are having low interest rates, low fees and not so strict payback policies like standard bank loans.
Its having a flexible repayment terms that make paying for college a much more manageable reality and its not required to be repaid until your graduation is not completed.
Private Student Loans
These loans are offered by banks mostly like Bank of America and have strict policies about the loan repayment with high interest rates and fees as compare to Federal Student Loans. Main requirement for Private Student Loan is that borrower or co-borrower is having good credit. That’s why Federal Student Loans are always considered first.
Private Student Loans can help students to pay for their extra educational costs like textbooks, computers or for accommodation and transportation.
Bad or Poor Credit Student Loans
There are so many possibilities for students to get loans with bad or poor credit. Such as federal loans require no credit check or if you have bad or poor credit still you will be approved for federal funds. But other types of loans can help circumnavigate bad credit. The fast student loans, no credit check student loans and direct student loans provides a lot of options to students who wish to get ahead but don’t have enough credit to back up their goals.
Student Consolidation Loans
In general consolidating student loans is the option kept for the student who are having multiple or high monthly repayments. The programs had been liked by majority of students because it ensures that grads avoid default that the Federal Family Education Loan Program (FFELP) includes a federal consolidation loan.
There are many private lenders also who provide private student loan consolidations.
Being defaulted for student loan repayments its better for you to find out first that if you are eligible for student loan consolidation.
Alternative Student Loans
Private student loans and all those loans, which do not fit to other broad categories, are included in Alternative student loans. For example Parent Loans for Undergraduate Students or Plus Loans will be fit in this category.
Plus loans are particularly only offered to parents of the students. Graduate Student Loans can’t be included in above-mentioned categories, because they are only for the students who are pursuing post baccalaureate degrees and that needs additional financing for their education expenses.
Institutional Student Loans
Several colleges and universities offer institutional student loans. Interest rates and terms of those loans provided by institutions vary. Better information about this type loans you can get from financial aid department of your educational institution.
How To Manage Student Loans
There are so many sound financial management options, which you should know while repaying your student loans:
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Consider the beneficial features of loan forgiveness programs. Mostly these programs are offered to nursing students, med students and the students who wants to serve in military. Eventually you agree to work or serve for a period of time in exchange for all or partial loan forgiveness.
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Make it sure for repaying the student loans on time. Because making repayments on time regularly, the lender will may reduce interest fees. But if you find yourself constantly delinquent then consider a student consolidation loan program. Being defaulted can never be a solution for that.
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You can manage your loan repayment by using online calculators. From online calculators you can easily figure out your total loan repayment including interest.
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There is couple of important tax credits from federal government: Student loan interest deduction and the Hope Scholarship Credit. Be sure to make them regular part of your annual tax preparation.
Tips for Student Loans
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Enhance student loans with other financial options like savings and free aid. Make it sure to begin college savings plan as soon as possible. Most of savings plans let you to save tax-free money. Some states even provide monetary incentive/gifts. Apply for grants and Scholarships.
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Try to understand all of the terms and conditions of your federal and private student loans because you will be bound to these loans for several years.
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Never miss payments for loans. If you are always running short of money every month then call your student loan lender talk to them. If you default then its almost impossible for qualifying for a consolidation loan .it will have serious affects on your credit score and can ruin your credit rating.
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